Real Estate Exam

Colleen and Judy purchased a dilapidated townhome in an estate sale. Due to their fix-up work and the current economy, the property value has skyrocketed. They decide to sell it to get their equity out of it. After they list it, a woman comes forward, saying she is an heir to the previous owner and lays claim to the property. Which general warranty deed covenant protects Colleen and Judy?

The covenant of warranty

Alluvion describes new deposits of land that are the result of what natural process?

Accretion Amortized

Appraiser Niles uses ______ to determine a range of values based on comparing a subject property to comparable sales. He makes sure to use some comparables that lack features of his subject property, and others that have even more desirable features, to balance out the comparison.

Bracketing

______ is a process in which an appraiser determines a probable range of values for a property by comparing a group of comparable sales to the subject. The appraiser attempts to include both superior and inferior units of comparison, such as age, transaction price, etc.

Bracketing

According to Pennsylvania law, which of the following statements related to designated agency is true?

Brokers may designate licensees at any time, as long as they get the client's permission.

Clay is interested in purchasing a condo about a mile from the city center. He went to the city records office to review everything that was filed by the condo developer. In the condominium declaration, he sees how ownership of the common areas is shared among the ________.

Unit owners

Blake is allowed to use his property in a way that's prohibited under current zoning ordinances, because those ordinances would cause undue hardship for him. What gives him this permission?

Use variance

Being accused of unauthorized practice of law?

Using approved fill-in-the-blank forms

Are going into business! Gwen is buying a share of Starla's franchise. Their attorneys drew up a contract that had Gwen providing $45,000 to Starla in return for 50% ownership. Gwen and Starla happily signed the contract, Gwen paid Starla the $45,000, and Starla presented Gwen with a notarized certificate showing Gwen's 50% ownership in the company. What type of contract is this?

Valid

Christine listed her house with you. Tailleur represents the buyer, Rebecca, and the seller's mother, Freida, is paying your commission. Which of these factors determines how legal agency is determined in this situation?

Christine listed the property with you.

______ is the principle that the more similar properties there are on the market, the lower the price will be driven.

Competition

Alice owned a double lot on the waterfront. She sold the lot to Ronesha and included a deed restriction prohibiting construction of any building taller than one story. Ronesha wants a three-story house. What should she do?

Conform to the deed restriction.

Connor was the seller and Duke was the buyer when Connor sold his property. Who conveyed the title?

Connor, as grantor

Buyer Josephine had just signed a contract on a house when she discovered that seller's agent Franklin knew that this house was 3500 square feet, but he listed it at 3900 square feet. Which essential contract element has been compromised?

Consent

Dean and Michael have an oral contract. Dean said he would sell Michael his bike in return for Michael's vinyl album collection. What does the record collection represent?

Consideration

Easements are a type of encumbrance that can affect a property. Which of the following is true about easements?

Easements are often established by a written agreement between the parties.

After a life estate holder dies and ownership rights have either reverted to the original owner or have been transferred to a remainderman, with what type of estate is the property held?

Fee simple

As part of the sales contract, Garth, the seller, was supposed to provide a copy of the seller's disclosure to the buyer, Melanie, but he failed to do so. What type of contract is this?

Voidable

Christina purchased a house from Thomas. When did she officially gain ownership of the property?

With the transfer of deed from the seller to the buyer

Corinne, an escrow agent, is preparing for the Thomas/Trenton closing in four days. Which of these documents will Corinne prepare?

Working with the lender, she'll prepare the settlement statement, which details the costs the buyer and seller will have at closing.

Charles is selling his home to Sheila. Charles has an existing loan that he will continue to make payments on. Charles is also extending credit to Sheila for the balance of the purchase price. Sheila will make monthly payments to Charles. What type of financing is used in this transaction?

Wrap-around loan

A professional, on-site measurement of the lot lines and dimensions of a property is known as a(n) ______.

Survey

An organization with many investors who jointly participate in a real estate investment and must adhere to the rules and regulations of the Securities and Exchange Commission is a ______.

Syndicate

Co-ownership with inheritance rights is what kind of real property ownership?

Tenancy in common

A homeowner has converted two rooms in his home to a rental unit. What does the "Mrs. Murphy" exemption permit him to do?

Refuse to rent to a female tenant.

Ashton, an appraiser, is estimating value using the sales comparison approach. He applies more weight to two comparables over several others he used. What process is he utilizing?

Reconciliation

Cheng is selling his property to Jericho. What's the best method Jericho can use to ensure his interest in the property?

Record the deed in his name.

Demographics impact the housing market. Which of the following is a true statement?

An increase in the number of retirees in a given population would negatively impact the demand for large, single-family homes.

Anna manages an apartment complex for her landlord, Katherine. Anna's friend Kevin is looking for an apartment, and without asking Katherine's permission, Anna rents him a two-bedroom apartment that she's had trouble renting for the one-bedroom rate. Which of these statements is true?

Anna has breached her fiduciary duties to Katherine.

_______ is a standardized measure for interest rates and other costs of the loan.

Annual percentage rate,

Any market conditions impact housing prices. Which of the following is a true statement?

Reduced consumer confidence makes new buyers wary of purchasing and homeowners hesitant to trade up.

Chrissy lives in Lake Ridge Estates, a neighborhood in which vinyl siding may not be used on homes. This HOA regulation is what kind of private land control?

CC&R

A clause that allows the parties to agree that they won't litigate if there are any contract disputes is a/n _________.

Arbitration clause

As part of its penalty for violating antitrust law, Homes4Cheap, Inc. has been ordered to undergo court-ordered supervision. How long can this supervision last?

10 years

All lenders have different underwriting standards, but traditionally, the housing debt-to-income ratio has been ______%, with a total debt-to-income ratio of ______ %.

25 to 28; 33 to 36

A period of stagnation in real estate when no one is buying and no one is selling is known as ___.

A downcycle

Charles is selling his property to Seth. Charles is financing part of the transaction for Seth, who will make payments to Charles while Charles retains the property title. What is this an example of?

A land contract

Assuming all of the following individuals are performing these activities for another and for a fee, who must hold a Pennsylvania real estate license in order to legally perform the activity?

A son selling his parent's house

Elaina and Allen just purchased a home using a deed of trust. Which of the following is most likely true about their home loan?

A trustee will hold title until the loan is paid.

Carlson presents a real estate purchase contract to his clients. Along with the contract are several supplemental documents attached to it. What are these called?

Addendums

Buyer Daphne and seller Kurt signed a sales contract with a definite closing date of May 15. Daphne then learned that she needed to move the closing date to June 15. What document should she use to make this change?

Amendment

Allen and Lewis are friends who each recently purchased real estate. Allen purchased a patio home in a small town an hour from the city, while Lewis purchased a condo in a really hot area near the city center. Although they paid similar amounts for their properties, Lewis' condo is worth much more two years later. Which economic characteristic does this demonstrate?

Area preference

Belinda is a licensee whose client asked her to draft an addendum containing complicated terms that even Belinda doesn't fully understand. Belinda should ______.

Avoid unauthorized practice of law

Bill is joining his inspector Hank for an inspection of the property he hopes to purchase. Hank notices that the dirt on the exterior of the home slopes toward the house. He explains that it should slope away from the home. When it doesn't, what problem might this create?

Basement leaks

Ben, a property owner, is hiring Cam, a real estate licensee, to manage a property. The property is currently occupied by Heidi, whose lease is set to expire at the end of the year. Which of these individuals are parties to the property management agreement?

Ben and Cam

Desmond has a signed listing agreement with his clients, the Harpers. In exchange for helping the Harpers list, market, and sell their home, the Harpers have agreed to pay Desmond a commission. What type of agreement do Desmond and the Harpers have?

Bilateral

An easement dictates that property owner A gives the right to property owner B to use a portion of the property. Which term describes property A?

Servient estate

Edward, a Pennsylvania broker, is going through transaction files from one year ago. Which of the following items can be disposed of?

Consumer Notice

Burt owns a development company that specializes in constructing new, energy-efficient houses. The best approach for an appraiser to use in the appraisal of Burt's newly built homes is the ______.

Cost approach

Darren and Natalie are first-time buyers who have decided to purchase a newly built townhouse. Their agent, Jenner, tells them that the builder must provide a one-year home warranty. Which of the following conditions is most likely true?

Darren and Natalie are using an FHA-insured loan.

A ______ is a method of conveying real property from one party to another.

Deed

A part of your property is used by the local utility company to maintain its power lines. What's this an example of?

Easement

A(n) ______ is an example of a limited agent.

Escrow officer

A loss in value caused by an undesirable or hazardous influence offsite is which type of depreciation?

External depreciation

Another term for a valuation is ______.

Formal appraisal

A form of depreciation or loss in value caused by defects in design defines which of the following terms?

Functional obsolescence

Brittany has a small office in a professional building. She has a set monthly lease payment that has been calculated to include maintenance of the common areas in the building, such as the restroom and small kitchen, and all nets, utilities, and janitorial charges for her space. The payment also includes taxes and insurance. The landlord takes these payments and pays the individual expenses himself. What type of lease does Brittany have?

Gross lease

Acme Realty offers discounted services. Berringer Realty and Hawthorne Real Estate Group decide to not show any of Acme's listings and to prohibit showings from Acme buyers to drive Acme out of business. What is this an example of?

Group boycotting

Charlie represents Sue, a buyer, in a transaction. A licensee from another firm represents the seller, Claude. Claude will pay a 6% commission to his listing firm, and that firm will split the commission with Charlie's firm. Charlie will be compensated through his brokerage. What's true about this situation?

In this transaction, Charlie only represents Sue and the other licensee only represents Claude.

Ashish is purchasing a bank-owned property. His real estate agent tells him the bank is offering insurable, not marketable, title. What does this mean to Ashish?

Insurable title is one that may have known defects but is still insurable. Ashish should carefully review the title policy.

An easement dictates that property owner A gives the right to property owner B An example of this type of leasehold estate is a month-to-month lease.

Periodic estate

Broker Hal enters into a listing agreement with seller Jane. Jane insists that the agreement state that only native-born U.S. citizens be allowed to buy the home. For what reason will this agreement be considered void?

It lacks a lawful objective.

Drake's offer to purchase Kevin's condo currently has a financing contingency, an inspection contingency, an appraisal contingency, and a sale of current home contingency. Kevin also got an offer from Lucy, which came in at $5,000 less than Drake's offer but with only an appraisal contingency. What is true about Drake's offer compared to Lucy's?

It's likely viewed as a less favorable offer

A mortgage is a legally binding document that creates a lien on a piece of property and gives the lender the right to foreclose on the property if the borrower defaults. Who or what entity is considered the mortgagee?

Lender

According to Pennsylvania law, which statement is true regarding licensees and inspections?

Licensees aren't required to conduct an independent inspection of the property.

A property owner's right to access ponds, lakes, oceans, and other closed bodies of water bordering the owner's land is called ______ rights.

Littoral

Carter is a real estate salesperson in Pennsylvania. He's got a new listing and is ready to advertise it for sale. What must he have first so he can do this?

Permission from the owner to advertise the property

Dean's new business venture is a software services firm where IT professionals handle programming and customer service tasks for a number of business clients. His employees all work at tables in an open office space. Dean most likely has a _______ lease for the office space.

Loft

A couple of licensees you know from different firms are tired of competing with one another for the same listings. You overhear them saying, "You take the north side of town and I'll take the south, so we aren't stepping on each other's toes." You stop their conversation to tell them they're committing an antitrust violation. Which one is it?

Market allocation

A new real estate professional is getting to know licensees at his new firm, Tremont Homes. One licensee tells him there's an unwritten agreement with a neighboring firm that Tremont serves the mid-town area, and everyone who has prospective clients in that area refer their leads to Tremont. What's this an example of?

Market allocation

Bo's real estate ad states: "Custom homes for sale with scenic mountain views. Easy financing and low down payments." What else must be included in the ad in order for it to comply with TILA?

Nothing

Corinne is 68 years old and employed full time. She's of Spanish descent, is raising her 12-year-old grandson, and lives with her partner, Katherine. She requires an accessible apartment because she uses a wheelchair. Under which of the following federally protected classes might Corinne be protected if she faces housing discrimination?

National origin, sex, disability, and familial status

A timeshare developer in Pennsylvania is offering prospective buyers $5,000 off their purchase price if the buyer waives the right to cancel upon signing a purchase agreement. Is this legal?

No, per Pennsylvania law, the buyer's right to cancel can't be waived.

Eileen is preparing a report pursuant to the terms of a property management agreement. This report attempts to predict the income and expenses associated with running the property over the next year. What report is she preparing?

Operating budget

Angelo's aging mother needs a place to live out her remaining years. Angelo conveys a home to her, but only for her lifetime. This is an example of what type of life estate?

Ordinary

A life estate can best be described as ______.

Ownership, possession, and control for someone's lifetime

A surveyor created a lot and block survey for a new residential development. The first thing she did when she surveyed the new neighborhood was to reference a metes and bounds land description. From there, she divided the land into numbered lots and blocks. This output is known as a _______.

Plat map

Eileen is preparing a quarterly report pursuant to the terms of a property management agreement. This report shows the property owner whether this property operated at a surplus or deficit during the reporting period. What report is she preparing?

Profit and loss statement

Conrad just closed on the house he's buying to fix up. Why should he follow up to be sure the deed has been recorded?

Recording provides constructive notice that he owns the property.

Bob signed a contract to purchase Ingrid's apartment building. Bob decided he didn't want to be a landlord, and Ingrid decided she didn't want to sell and move to Maui. They mutually agreed to cancel the contract and Ingrid returned Bob's earnest money. This is referred to as ______.

Rescission

Ari owned acreage in a rural area. He sold a small portion of it to a neighbor in an informal transaction but made no record of the sale or change of ownership. A developer offered Ari several million dollars for the entire acreage, and Ari eagerly accepted the offer. What covenant is Ari in danger of violating?

Seisin

Connie is an unlicensed individual who serves as a member on the Pennsylvania State Real Estate Commission. What compensation does she earn for serving in this role?

She receives a per diem of $60 when spending time on commission business and is reimbursed for reasonable expenses.

According to the process appraisers follow, what action is taken first upon being assigned a property for appraisal?

State the problem.

A "homes for sale" magazine contains the following ad: "Cozy two-bedroom starter home, neat and clean, ready for move-in. $140,000. Low down payment and easy financing!" Which of these statements is true?

The ad complies with TILA because it doesn't contain any of the trigger terms that require full disclosure of all financing terms.

A seller tells his agent that he has to sell his house quickly because of a divorce proceeding, and that he's willing to accept less than his list price. His agent tells a buyer that the seller will accept as much as $10,000 less than the list price. Which of these is true?

The agent has breached his duty of confidentiality to his client

Candace and Phil Tolson listed their home for sale with Trent Richards, the broker for Richards Homes. Sadly, Trent became incapacitated due to a car accident. What's the status of the listing agreement?

The agreement terminates by operation of law.

Bart just toured his fourth patio home of the day. To help him remember what he saw in each one, he's making notes about décor, updates, and inclusions that will stay with the property. Which of the following items is NOT considered personal property and would therefore stay with a home?

The chandelier in the foyer

A client terminates a listing agreement before its expiration date. What happens now?

The client may owe a commission anyway

Debra's listing agent, Raj, just called to tell her that he'd received an offer on her house and an earnest money check for $4,500. "I'm on my way over to go through the offer with you. I think you'll like it!" Debra's excited, and she knows exactly what she wants to spend that $4,500 on. What's wrong with Debra's thought process?

The earnest money doesn't belong to Debra. It will be held in an escrow account.

A family of four, with children ages six and nine, is denied the opportunity to view an available unit at a community that caters to seniors. Which of the following statements is true?

The federal Fair Housing Act allows an exemption for communities that are designed and

Developer A has a project planned that does not conform to the community zoning regulations and wants to make a change request. Which local land use group would the developer ask, and for what?

The zoning board of appeals for a variance.

Charlie represents Sue, a buyer. Charlie is being paid by Claude, the seller, through his brokerage. What's true about this situation?

This doesn't change the agency relationships.

Danette hasn't paid the first quarter water bill on her property. It was due on April 1. She's closing with the buyer, Jason, on April 1. What type of expense is this and how will it appear on the settlement statement?

This is an accrued expense, and will appear as a seller debit and a buyer credit.

A landlord with a strict "no pets" policy won't rent to a woman who uses a service animal to assist with her epilepsy. Which of the following is a true statement about this situation?

This is discrimination based on disability.

At a recent real estate commission meeting the following members were in attendance: the commissioner of the Bureau of Professional and Occupational Affairs, the director of the Bureau of Consumer Protection, five licensed real estate brokers with at least 10 years' experience, and a cemetery broker with at least 10 years' experience. Who was missing?

Three unlicensed members representing the public at large

A town has just assigned a lower-density use zone to an area that previously allowed higher density. What's one reason the town may have done this?

To limit overgrowth

Charlene shares one wall with her neighbors to the side, but her home has three levels and she has no upstairs or downstairs neighbors nor a neighbor on the other side. What type of dwelling does Charlene own?

Townhome

Aldrich is conveying marketable title to a property buyer. Should he also furnish a title insurance policy?

Yes, because title defects not revealed in a title search can crop up even with marketable title.

After having second thoughts, Peter decided to cancel his listing agreement with Orville, a Pennsylvania broker. Peter would still like to compensate Nancy, the associated licensee who was working closely with him, for the services she provided. Can he do this?

Yes, but payment must go through Nancy's broker Orville.

Can police power ever be used in a way that restricts citizens?

Yes, if it's for the public good.